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The year 2018 marked the start of the most brutal crypto bear market whose effects are still lingering. Critics have been boasting that this downturn was inevitable as the bull market was a bubble filled with unrealistic optimism and expectations, and Bitwise exec Matt Hougan is one of them.
Hougan is the global head of research at Bitwise, creator of the world’s first cryptocurrency index fund. He said that most cryptocurrencies are looking at a painful death ahead. At the same time, he sowed seeds of hope saying that those who will survive will be interesting investments.
“It was a massive run-up and a massive pullback,” Hougan proclaimed to Bloomberg’s Barry Ritholtz on his podcast. “[It was a] total bubble.” He said that while financial bubbles are considered a bad thing, the Bitcoin bubble fueled the media’s interest in the blockchain. This directly resulted in a greater public interest in the space and attracted a talent pool that otherwise would not have been possible.
“It did the same thing that happened with the Internet, which is it attracted a huge amount of talent. It did bring a lot of capital and interest in development to the ecosystem. So, I do think interesting things will be born from that. But, yes, it was a difficult year in 2018. I think [Bitcoin] is the next dot-com. Remember, the dot com bubble created Pets.com, but it also created Amazon.”
He continued on to paint a rather bloody picture of the current crypto space that is saturated with over 2,000 cryptocurrencies. “There are 2,000 cryptocurrencies out there; 95 percent of them are useless and will die a painful death. The sooner that happens, the better. But from those ‘ashes,’ will merge important things. Just like from the dotcom ashes emerged Amazon, Google, and Facebook, etc.”
He also commented about how Bitcoin is the current generation’s version of gold. He noted that recent surveys have shown that millennials have a favorable view of cryptocurrencies compared to baby boomers. “Every generation has an asset that they love or a way of getting the exposure that they love. The Greatest Generation love gold, then people loved active mutual funds. Gen X loved hedge funds. Millennials love crypto.”
Hougan also urged everyone not to lose focus. He said that established corporate juggernauts like Amazon, Apple, and GE have all weathered massive stock market fluctuations on their rise to the top.